Centerspace (CSR) 2015 Q3 法說會逐字稿

Good morning and welcome to the Investors Real Estate Trust third-quarter FY15 earnings conference call.

(Operator Instructions)

Please also note that today's event is being recorded. I would now like to turn the conference call over to Ms. Cindy Bradehoft, Investor Real Estate Trust Director of Investor Relations. Please go ahead.

Thank you. IRET's Form 10-Q was filed with the Securities and Exchange Commission yesterday after the close, and our earnings release and supplemental disclosure package was posted to our website at iret.com and also furnished yesterday on Form 8-K.

Before we begin our remarks this morning, I want to remind you that during the call we will be making forward-looking statements which are predictions, projections or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results may materially differ because of factors discussed in yesterday's Form 10-Q and the comments made during this conference call and in the Risk Factors section of our annual and quarterly reports and other filings with the Securities and Exchange Commission. Investors Real Estate Trust does not undertake any duty to update forward-looking statements.

With me today from Management are Tim Mihalick, IRET's President and Chief Executive Officer; Ted Holmes, Executive Vice President and Chief Financial Officer; and Diane Bryantt, Executive Vice President and Chief Operating Officer. I would now like to turn the call over to Tim Mihalick.

Thank you, Cindy. And good morning, everyone. I'm excited to speak to you this morning about IRET accomplishing a strategic goal of AFFO dividend coverage ahead of schedule. When we established this goal in the summer of 2013, I anticipated coverage to be reached by the end of FY15. Now, we have maintained coverage over the last two quarters and the trailing 12 months.

I want to take a moment and thank those that have helped IRET achieve this goal. I have said this before, and I never get tired of repeating it -- IRET employees, from the leasing agents to the maintenance staff to the HR department and up to the top, are second to none. They are committed as employees of IRET to work on behalf of our shareholders, and I would like to complement them for doing that work every day. Their diligence and hard work is what has allowed IRET to accomplish this goal ahead of schedule. Their commitment gives me assurance that we will be able to maintain coverage in the quarters ahead.

On January 23, I announced a significant change in our strategic plan. I had previously alerted the market of our intent to exit the retail segment of our portfolio in FY16. But after examining the strong demand for office properties, I announced a plan to accelerate that segment of our portfolio, as well. I am very confident that as we complete the significant change, we will have a stronger balance sheet that will be easier for analysts and investors to understand. Diane will provide an update on where we are at in this process later in the call.

Our long and proven track record speaks to the abilities of this Management team to perform. I believe this team is positioned for continued success. And, as it relates to that, I am proud to announce the following changes within my Executive team. Mike Bosh will continue on as General Counsel and serve as Secretary of IRET. Diane Bryantt has been appointed Chief Operating Officer where her experience as CFO will be a positive for overall operations. Mark Reiling has been appointed to Chief Investment Officer. Mark's depth of knowledge in the investment world, including acquisitions and development, will allow IRET to continue its growth pattern as we have previously discussed. And, finally, Ted Holmes has been appointed Chief Financial Officer. Ted is experienced in the debt and capital markets and will be of great benefit as we continue to restructure our balance sheet.

Before I move on I would like to comment on the succession plan that was in place. Before the start of FY15, I undertook the task of working with my team to establish a succession plan in case a senior team member exited IRET. As was evidenced by the seamless transition that occurred here at IRET, you can rest assured that this team has the right people in the right places and is committed to creating value for our shareholders.

Before I turn the call over to Diane and Ted, I want to take a moment and touch on IRET's exposure in the energy markets in which we operate. I know recent publications have published stories about the doom and gloom around the slide in oil prices and the impact it has had on rental housing. You are obviously curious to what effect this drop in oil prices has had on IRET, and I will let Diane update you on some of the specifics later in the call but I wanted to remind you that we did not pivot the portfolio on Boomtown, USA, better known as Williston, North Dakota, but we used strategic joint ventures to maximize our returns in Williston. Of the wealth of information about the Bakken field, I would encourage you to search out the Bakken Magazine to get a true perspective of the activities in Williston.

That being said, I wanted to call your attention to this map of North Dakota. As you can see, the statistics provided by the North Dakota Department of Mineral Resources in the latest issue of the Bakken Magazine gives you an indication of the breakeven price points at which new drilling would cease. McKenzie County in the heart of the Bakken would need prices to drop to $30 per barrel to cease new drilling. And although I think that is an interesting statistic, what I find even more interesting is the bullet point which states the price at which production from existing wells would be shut into is $15 per barrel.

According to a report published by the North Dakota State Industrial Commission dated December of 2014, there were approximately 12,000 wells in production. Since I have been told it can take upwards of three people to maintain production, I believe the need for housing will continue. Most of the production workers are our target tenants, those who are committed for a longer term and seek amenities that our complexes provide. We will continue to monitor the energy impact on IRET and adjust our decisions accordingly. But as Diane will point out later in the call, the impact to IRET is not as drastic as has been suggested by some of the national attention we have received. Remember, we have five projects, three multi-family and two medical facilities, underway in the Minneapolis market to spread our risk throughout the Upper Midwest.

Thank you and I will now turn the call over to Ted Holmes.

Thank you, Tim. Good morning, everyone. IRET had another solid quarter with FFO of $0.17 per share for the third quarter ending January 31, 2015, which repeated the strong performance from the second quarter ending October 31, 2014 and up from $0.14 per share reported two quarters ago. We are also excited that AFFO was reported at $0.15 per share for the third quarter ending January 31, 2015 versus $0.11 per share for the comparative period one year ago.

Looking back four quarters of AFFO performance, we have now covered our current dividend distribution one quarter ahead of our previously discussed timing. While significant, we realize that ultimately Management's focus should be our continued efforts on our FFO growth strategy which can then translate into strengthening AFFO. With that in mind, we firmly believe our decision to explore the sale of our office and retail portfolios, if successful, should provide a more predictable income stream and allow IRET to deploy its resources into less capital intensive property segments further enhancing Company value and the predictability of FFO and AFFO results.

As for the quarter performance reflected in our income statement, let me point out a few highlights. Total revenue for the nine months ending January 31, 2015 was $212.4 million or 6.6% higher than the comparative period one year ago. Total revenue for the Company for the three-month ending period January 31, 2015 was $73 million, or, again, 6.6% higher than the previous quarter ending October 31, 2014. Clearly, the pace of our successful delivery of development projects and our continued improving performance in our multi-family and healthcare operations are having an increasingly weighted positive impact on total revenue for the Company.

As for expenses, if we remove non-cash impairment, amortization related to non-real estate investments, depreciation and amortization, and our TRS expenses related to one asset, total expenses remaining, which really translate to real estate operations, was 4.7% of total assets for the nine-month period ending January 31, 2015, consistent with the same ratio of 4.7% to total assets for the comparative nine-month period ending January 31, 2014 one year ago. This is testimony to the Company demonstrating growth but maintaining its expense ratios as a whole. We are excited about these trends in our income statement. Diane will touch on specific expense category variations in her remarks as detailed in the Management Discussion section of the 10-Q filing.

I also want to point out during the quarter the Company did take an impairment loss of $540,000 relating to two unimproved parcels of land, bringing total impairment for the nine months ending January 31, 2015 to $6.1 million. As for the balance sheet cash on hand was $52.1 million as of January 31, 2015 as compared to $47.3 million at the beginning of the fiscal year. In addition to continued strong cash flow from operations during the first three fiscal quarters of the year, we have raised approximately $39 million through our dividend reinvestment program using the DRIP waiver and IRET direct features. This equity, together with our use of sale proceeds and our line of credit availability, which stood at $39.5 million at quarter end, should provide sufficient liquidity for the uses we have identified for the Company moving into FY16.

Our earnings 8-K release does provide a liquidity profile summary of potential sources and uses. As of January 31, total liabilities and mortgages payable, each as a percentage of total assets, saw no material change from that which was reported at the end of the fiscal year period April 31, 2014. In addition, overall the Company saw no material change to its leverage metrics. We did see slight improvement in our debt to EBITDA ratio, down to approximately 6.5 times, as we again see continued improvement in net operating income for the Company as a whole.

Our debt policy remains consistent. We are fixing our debt interest rates long on assets we intend to hold long term and using variable rate debt on a select basis on assets we intend to sell or reposition. Worth noting on the balance sheet, the other liabilities category has increased through the fiscal year as this classification includes advances on our construction loans to help fund our development pipeline. We don't foresee any material change in our overall leverage levels for the Company moving into FY16, provided, however, depending on the eventual outcome of our potential office and retail segment sales and pending resolution of our CMBS loan and special servicing discussed on previous calls, which I will touch on in a moment.

Our target levels of debt could be reduced modestly and this certainly is an objective of Management over time. During the quarter, we closed three loans totaling $66.2 million. The majority of this was a $51 million construction loan for our 71 France development in Edina, Minnesota with one of our stronger banking relationships. Our weighted average interest rate during the quarter fell to 5.17%, 9 basis points lower than the previous quarter end interest rate for the Company. We continued to enjoy a favorable debt market.

And while recent increases in Treasury yields may impact future borrowing costs, debt markets continued to be robust, offering attractive debt structures which we are optimistic may continue to help maintain and potentially reduce interest costs for the Company as a whole. Our debt maturities remain manageable in the coming fiscal years, and in some cases provide an opportunity to reduce interest costs and access pent-up equity after long periods of amortization.

We do have one large CMBS loan maturing in FY17 we have discussed on previous calls, which includes as collateral eight commercial assets we impaired in FY14. These assets maintain a high level of occupancy, exceeding 90%. And the loan associated with these assets is current and cash flow is currently adequate to service the loan before any capital improvements, commissions or tenant improvements. The loan has been transferred to a special servicer and we are engaged in discussions with the servicer on various options regarding the loan. The loan is non-recourse to our subsidiary entity, subject only to industry standard carve out guarantees by both the borrower as well as IRET. IRET can make no assurances about any possible outcomes of any discussions with the servicer.

As mentioned in previous calls, we continue to review the effect on the Company if these assets and the loan associated with them were removed from the portfolio, which could include the conveyance of the assets to the lender pursuant to the loan terms. Upon review at quarter end, subtraction of this portfolio in its entirety is again most likely neutral on our metrics. We will continue to monitor this group of assets closely as we pursue discussions with the servicer in advance of the loan maturing in October of 2016.

In conclusion, IRET had strengthening quarterly results and is excited to see the continued completion and delivery of our development pipeline and Company focus on the asset classes we think can have the most beneficial impact for our shareholders, that being multi-family and healthcare. Finally, I am pleased to report that the IRET Board of Trustees declared a quarterly distribution of $0.13 per common share and unit to be paid April 1, 2015 to the shareholders of record on March 16, 2015. This will be IRET's 176th consecutive quarterly distribution.

Thank you. I would now like to turn the call over to Diane Bryantt, Executive Vice President and Chief Operating Officer.

Thank you, Ted. Good morning, everyone. I will be addressing key areas of operation and transactions to the balance sheet, including development, acquisitions disposition, same-store results, and our overall investment strategy, starting with our development acquisition and disposition activity in the quarter.

As we have discussed over the past couple of years, we determined that we had opportunities to provide growth and create value by building into our markets. We are very pleased with the events in the third quarter of fully delivering five projects to the market, placing $103 million of assets to work. Four of these projects are multi-family consisting of 592 units and one 5,000 square foot single-tenant retail facility. Year-to-date, total developments placed in service is $113 million. These multi-family assets placed in service in the quarter are in various stages of lease up given the timing of delivery in the quarter. Currently, occupancy rates are ranging from 30% at our Arcata apartments that just opened in January to 85% at the Commons that was completed in December 2014. Market rents are at or are exceeding pro forma and we are looking forward to the positive contribution to revenue in the fourth quarter.

Still in the pipeline to be delivered is $269 million of property within the next three quarters which represents an additional 955 units of multi-family, 130,000 square feet of healthcare, and 203,000 square feet of industrial space. Underwriting cap rates on these projects are ranging from 6% to 13%. Although we did not acquire any income-producing assets in the quarter, we do have under contract to purchase 24.3 million of multi-family assets with underwriting cap rates estimated to be at 6.5%. This bringing a total of $293 million of new income-producing assets to the balance sheet within the next three quarters.

Regarding our pending dispositions and our disposition strategy overall, on January 23, we did announce the exploration of disposition of our office and retail segment. The proceeds from sales of these segments will help meet the objectives of growth into our multi-family, healthcare and industrial segments. We have signed with CBRE a listing agreement that covers approximately 2.5 million square feet of office properties and 1 million square feet of retail properties. The offering was announced by CBRE in mid February and offering materials have been released. More detailed information is being finalized and will be released to qualified bidders as the marketing process continues.

Subsequent to quarter end, we did close on a disposition of three commercial properties totaling 86,000 square feet. And outside of those properties listed with CBRE, we currently have under contract for sale approximately 500,000 square feet of office properties for a total sales price of $34.5 million, an estimated cash out of $20.7 million. Again, proceeds from these sales will be used to support the strategic objectives of continued additional investment in multi-family, healthcare and industrial, as well as pay down outstanding debt including our line of credit and evaluating the call of a preferred stock.

Moving to operating results, details can be found in our same- and non-same-store results starting on page 36 through 42 in Form 10-Q that was filed yesterday, so I will touch briefly only on the highlights of each segment to provide a bit more color. First, let's cover non-same-store results by all segments, as this is primarily driven by new developments and acquisitions placed into service over the past two comparative periods. For the three and nine months ending January 31, non-same-store revenue increased by 85% to 89% over the comparative prior periods. NOI for non-same-store will be more predictable once these properties operate in a stabilized mode. However, we are very pleased with the performance of these new assets in making an immediate impact once delivered to the market.

Let's move on to multi-family. We continue with high occupancy at 94% in our same-store properties and this is allowing for opportunity to continue to increase rental rates. For the comparative three- and nine-month periods, same-store revenue was $862,000 and $2.3 million higher as compared to the prior period. It is not typical to see much activity in our markets for lease up in the months of November through January but occupancy increased by 2% as compared to the prior period year. We are pleased to see that growth in occupancy in the coldest months in our markets.

As expected, we did see growth in same-store expenses as compared to prior periods. If you'll recall in the third quarter of last year, we highlighted the effect of the real estate tax credit in the state of North Dakota that had a favorable impact of $877,000, and particular for same-store, multi-family this credit was $615,000. Although the tax credit was still in place for calendar 2014, taxing municipalities provided for substantial increased assessed valuations in FY15 on these same properties, and accordingly real estate taxes increased. Going forward we will monitor what will be going on in our legislature regarding tax credits for calendar 2015. However if we are able to continue to increase rents and maintain our acceptable property expense ratio of revenue in the range of 35% to 40% range, we will still meet desired levels of returns.

Regarding office, with the announcement to sell and the desire to sell this segment, we are still continuing to operate business as usual. Occupancy in this segment stayed consistent for both comparative periods at 84%. Not a lot of change in same-store results due to operations. However, quarterly results were impacted by a reduction to revenue related to the non-cash item of straight line rents. Without a lot of new leasing activity and less concessions in free rents that are associated with new leases, the burn off of this non-cash receivable will have the effect of lowering revenue. Overall for the office segment, we will continue to lease and operate in a manner to create additional value as we go down the sales path.

Our healthcare segment continues to operate at high levels of occupancy at 96% with no significant change in results of operations in our same-store properties. Notable to the quarter is the recognition of percentage rent related to the senior housing facilities. This amount was $1.2 million which is $238,000 higher than received in FY14. Our retail and industrial segments are our two smallest segments whose same-store results provided for no material change from prior comparable periods for me to comment on. The exit from retail segment had been announced in prior years and, like office, we will continue to lease and operate in a manner to create value. The current industrial portfolio consists of seven assets with a total square footage of 1.2 million with one project under development with a total square footage of 203,000.

Lastly, I'm going to discuss our limited exposure to the energy impacted end markets and revisit our overall investment strategy. As Tim stated, we all rating about the potential impact to IRET relative to the drop in oil prices. While we are all aware and cannot predict the future in this volatile market, we want to reiterate that Management and the Board at IRET do understand the risks but also in the rewards to investing into a boom. Our investment in the heart of the Bakken is in Williston, North Dakota.

The Company over the past two years has participated with a joint venture partner to build 433 units. And IRET on its own built a 44-unit complex for a total in that market of 477 units. This only represents 4.9% of our total multi-family units of 11,575 units. In particular to these projects in development, we are not seeing any material change in occupancy, rents, or concessions being applied over the past quarter for these properties that are fully developed. These fully developed properties are still operating at occupancy levels at 96% to 100%. Lease up on the most recently delivered units are meeting our pro forma projections.

Our commercial leasing related to the oil industry is in Minot, North Dakota at three facilities, and are on long-term triple-net leases with tenants such as Hess, IPS, and Enbridge. It is true that we have seen positive impact in our surrounding markets of the Bakken due to the energy boom. We still believe there is opportunity and demand for our product. Our disciplined underwriting approach, our understanding and presence in these markets gives us the ability to continue to meet or exceed our initial investment objectives.

Overall, we are going to remain true to our investment strategy when choosing our markets in our geographic footprint. These markets have the following characteristics -- they have a regional healthcare system; they have university and colleges; direct access to major transportation; and they have regional, retail and entertainment facilities. This, all with the intent to have a viable path to market leadership in these markets.

In closing, we are very pleased with our efforts to bring our developments to market. We are executing on our property sales and we will continue to stay disciplined in our investment approach going forward as we redeploy proceeds and continue with the effort to deliver -- and timely deliver -- our pipeline of $293 million of new assets.

With that, I will now turn the call over to Tim Mihalick.

Thanks, Diane. And I will ask the moderator to accept questions.

(Operator Instructions)

Our first question comes from Dave Rodgers from Baird.

Yes, good morning. Maybe, Diane, start with you -- question on multi-family occupancy. You finished the quarter at 94%, which was up year over year, but down, I think, sequentially 150, 160 basis points. So, just wanted to dive a little bit more into that. Is that mostly seasonal?

And then, maybe a second part to that occupancy question, flipping over to concessions, can you talk about the absolute level of concessions that you're offering in terms of either months free or any move-in specials with regard to Dakota Commons, Renaissance Heights, especially in the energy-impacted corridor?

Dave, we're going to have Ted touch on that for you.

Sure, good morning, Dave. Maybe I'll take the second half first, just with respect to the projects themselves and concessions.

I'd refer you to page 19 of the Q, and if you run down by project, Commons at Southgate, we're 90%-plus occupied there. Going down to Cypress Court, 90%-plus occupied. In fact, we've locked in our long-term debt on that project.

Red 20, coming off the winter, we're roughly 80% occupied now. Arcata -- that project, again, just came online in January, we're 30% occupied there. These are some tough times of year to lease in the midwest, you can imagine, through December, January, February; so, we're pleased with the lease-up in these projects so far.

Renaissance Heights, roughly 60% occupied today. Chateau is just being completed in June, so really no material leasing there. And then Deer Ridge, Cardinal Point and France, those leasing activities will begin this year -- this spring full force -- but really no leasing there yet, as those projects aren't near completion.

As far as concessions, the Company, as a whole, runs right now, round figure, about $100,000 a month. I think that was maybe December and January's trend for concessions across the multi-family portfolio. I would tell you, just with the discussion about energy, roughly $4,000 of that total was in Minot and Williston. So, really no material concessions at this point in those markets.

I'll tell you, in Minneapolis/St. Paul, the same is true; really no concessions at any of our lease-up locally here so far, and we're actually at or exceeding our pro forma rents. The Company, as a whole, we will see a seasonal dip in the winter months, but certainly we feel pretty pleased with where we're at with our multi-family occupancy as a whole.

Okay. And are you seeing pressure on shorter length of lease term for residential? What is your average length, particularly in Minot and in Williston and the energy-impacted areas -- again, getting a sense of any change in consumer behavior?

I wouldn't be able to quote you a length of month here on this call. I can certainly follow-up with that and get that.

But I will tell you that we will go down to a 6-month lease in certain situations. But most of the time, it is a 9- or a 12-month lease that we're targeting, both in Minneapolis/St. Paul, and all of our markets for that matter, and in the energy-impacted markets. So, it's really a 9- or 12-month lease that we're going for.

Okay, that's good. And then, maybe final on the energy would be: You do have some additional land out there. Is any of that additional land exposed in the energy corridors? And I'd tie that in to your comment on taking a modest impairment on a couple of land parcels in the quarter -- change in holding, change in plans, anything impacting from energy there?

I think we've taken a pretty measured approach here with respect to our strategy, in Williston specifically. We do have two other parcels that we purchased with the existing Renaissance Heights development parcel that's being constructed on that will be complete later this year. We have the ability to add potentially another roughly 500 units, should we choose to do that. That is not in process at this point.

This is early, we think, in this energy downturn with respect to the price of oil. That will find its own equilibrium. As Diane pointed out, we've got joint ventures in that market. We've been out there now for over three years with a measured pace of development; and at this point, don't foresee any additional construction. But we'll wait and see how our Renaissance Heights project leases up this year.

And we have banked land in most all of our markets, and we've represented that, and that's pointed out in our filings, anywhere from St. Cloud to Rochester to Monticello. We've got parcels shovel-ready, should we choose to attack another wave of development. But that's still in discussion. And we would certainly like to deliver for you and others and our shareholders what's in the pipeline currently, before we take on additional large waves of development.

Dave, I'll have Diane give you a quick update on the impairments you reflected.

Hey, Dave. The two impairments, the land one was a parcel next to Weston Retail that we recently sold and closed on. It was just a parcel of land that was being held for future development. I believe we will be exiting that market, and so we took a look at the land, what's remaining, and wrote that down to fair value, and put that in position for sale.

And the other piece of land was in Eagan, Minnesota, directly next to a commercial office building that we would be also looking to dispose of. We actually have an offer to purchase that land. Again, this was just a mark to fair value.

Those two pieces of land -- nothing to do with the energy-impact markets, but just overall strategy of geographic footprint and segment type.

Great. All right, last for me would be on the dispositions. It looks like you have a little over $50 million to close, either this quarter or into part of the next fiscal year under contract. Can you talk about the overall cap rate on the expected sales of the combined assets, either separately or together?

Dave, this is Ted. I would say the cap rate on these is going to vary because the occupancy in some of these buildings isn't as -- I'd take one of the assets is an office asset downtown Minneapolis, and that particular buyer has a redevelopment plan for that asset, and is not going to use it specifically for office. So, cap rate maybe not applicable. But I think with respect to the other office assets that are well occupied, you're going to see rate around an 8% to 8.5% cap rate on those sales.

Okay, thanks for all of the color; really appreciate it.

Our next question comes from Craig Kucera from Wunderlich Securities.

Yes, hi, good morning, guys. Your liquidity looks pretty good, closing out third quarter. You continued to issue a lot of stock in the DRIP. Obviously, the stock has come in about 15% from where we were through most of the second quarter. Is there any way that you can slow that down, or do you have a thought on how to manage that process when your stock price has come in so much in the last several months?

Craig, this is Tim. As we looked at that, we recognized that same challenge, and it's under consideration. With the proceeds that will be coming forth on the sales, it's certainly something we'll examine. And especially, as you indicated, with the dropdown in the share price, it's not something we want to give away, so we'll understand and take a look at that.

Okay. And with, obviously, the change in oil prices and your markets -- the number of energy-sensitive -- have you seen any delay in new projects starting, or any shift in supply in some of those markets? Or are most of your competition continuing to keep their foot on the accelerator?

No, I think, again, we've seen some pullback and some decisions on whether or not they want to move forward. I think we'll continue to see that. When we've talked about it in the past, having our boots on the ground has really helped us understand the need in those markets.

And I suspect, as we move forward, maybe over the next 12 to 24 months, the buying opportunities that we thought may come from other developers will come to fruition. But that's an opinion that I have, and one that I think could happen. There is some slowdown and some pullback from other investors.

Got it. I know you mentioned that your development yields are anywhere from a 6% to 13%, and you're typically running ahead of expectations. Can you put a number on how far you're running ahead of expectations, or maybe where the current average is on your projects currently under way?

Craig, this is Ted. I would tell you: We're going to average -- when you smooth it out across all of the developments, we're going to be right around an 8% return across the spectrum, I think, is probably a good -- and I think we've pointed that out before. But it's going to vary from energy-impacted all the way down to Minneapolis/St. Paul where you're going to really be tight on the low end of that scale, as far as return.

As far as the timing of these projects, if I understood your question correctly, we're basically on track. We're a little bit behind on a couple projects, but we are coming in at budget, really, with no material overages on these projects at this point. So, we're optimistic we can continue to deliver these on the balance sheet with the returns that we think are commensurate with the risks.

Got it. And in looking at your anticipated construction completion dates in the supplement, not a lot of change from last quarter. In fact, a few actually -- looks like they pulled forward maybe a quarter or so. How has the winter been there? And is that likely to slow things down, or are you thinking currently you don't expect things to really move around from what's in the supplement?

We've had a really, really mild winter out here, Craig, so that's really been helpful. So, I think the timing that you see in the Q on those projects is still very much on track.

Okay, great. I'll get back in the queue.

(Operator Instructions)

Our next question comes from Carol Kemple from Hilliard Lyons.

Good morning. Have you all got any initial feedback at this point for the portfolios that you've just put on the market?

I think, to this date, we have not really gotten any feedback from interested buyers. Certainly a lot of information has been delivered, and we're probably two to three weeks away from having complete packages out to the market. So, at this point, no.

At this point, do you have a date when you want all the bids to be in by, or is that still up in the air?

I think timeline-wise, Carol, we're probably looking at late fall by the time this whole transaction would potentially be complete, assuming we move down the road what we've laid out for ourselves. We're probably into that September/October/November time frame.

Okay, thank you.

(Operator Instructions)

Ladies and gentlemen, at this time, I'm showing no additional questions. I'd like to turn the conference call back over for any closing remarks.

Thank you. Again, this is Tim Mihalick with closing remarks, and to say thank you for taking the time out of your morning to listen in on the update to IRET. We're very excited about the performance of this first three quarters of FY15, and look forward to the future.

As I stated earlier, we've got a strong team in place from top to bottom. And we all have the best interest of our shareholders at heart, and are excited about what we can deliver in these markets, as we take advantage of the opportunities that are in front of us. Thank you for listening in and for your time.

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your telephone lines.